Voucher for VAT

What it means

A voucher for VAT purposes is an instrument that must be accepted as consideration, or part of it, for goods or services, where the goods, services or supplier are stated on the voucher or in its terms of use. Typical examples are gift cards, shopping vouchers and electronic codes.

The VAT act distinguishes single-purpose and multi-purpose vouchers. With a single-purpose voucher, the place of supply and the VAT due are known when it is issued, for example a voucher for a specific service in one country. With a multi-purpose voucher, such as a card for any goods at different rates, they are not.

Taxation follows from this. A single-purpose voucher is taxed at every sale as if it were the goods or service itself, and its redemption is not treated as a supply. A multi-purpose voucher is not taxed when sold; VAT arises only when it is redeemed for a specific purchase.

How it works in practice

For online shops and stores with gift cards, we first establish with the client which type of voucher it is. The range decides: if the card can be used for goods at different rates it is usually multi-purpose; for one service at one rate it is single-purpose.

We record the sale of a multi-purpose voucher as a liability to the holder and move it into revenue only on redemption. Unused vouchers after expiry are assessed separately. For till systems we check how eKasa records the sale and the redemption.

Vouchers given to employees as gifts are also assessed for income tax. As benefits they are generally non-cash income of the employee, taxed as wages unless specific exemptions apply, such as a contribution from the social fund.

What to watch out for

A voucher is not the same as an advance or a discount coupon. A discount coupon merely reduces the price and is not consideration; an advance relates to a specific supply. Wrong classification leads to VAT in the wrong period or at the wrong rate.

With a single-purpose voucher sold through an intermediary, VAT is due on every transfer in the chain. If vouchers are sold through partners or platforms, the contractual set-up should be assessed before sales begin.